Haggling over the Grand Staircase-Escalante

Conoco has turned its back on an oil well in Utah's Grand Staircase-Escalante National Monument.

In December, Conoco engineers "packed up their oil rig and they are out of there," says Bureau of Land Management spokesman Don Banks. "The hole has been capped without a blade of monument grass or a dollar of taxpayer green being touched."

Conoco spokesman John Bennitt says the company decided not to drill on a federal lease in Reese Canyon after a test well on adjacent state school-trust lands failed to turn up producible oil. The federal lease expires Feb. 8.

Although the focus has been on Conoco, the actual protagonists in what will probably be a long struggle are the federal government and the state agency that administers the 176,000 acres of Utah school-trust lands that lie within the 1.7 million-acre monument.

School-trust lands produce income for Utah's crowded schools. While a national constituency tries to protect the monument from mineral development, Utah educators and parents, liberals and conservatives alike, want to get the most out of the school-trust lands.

A complex craps shoot

If Conoco walks away from its leases, the job of preserving the monument will be that much easier, or at least cheaper. If the company strikes it rich, state lands will be worth more - meaning more money for Utah's schools. So what has Conoco found?

"They did not find what they were looking for," says the BLM's Banks.

"It was the motherlode," says one official with the School and Institutional Trust Lands Administration.

There is reason for both claims. While the Reese Canyon well hit no oil, it did encounter natural gas in rock layers deep in the ground. Conoco says the gas was trapped too tightly in the stone to be worth pulling out, but it might indicate that there is oil or gas elsewhere in the monument.

In the coming months, Conoco says it will take a close look at its findings, and consider drilling a second well on one of the remaining 58 federal leases it signed before the monument's creation in 1996.

As part of its overall strategy, the Trust Lands Administration has sued the Interior Department to disband the monument, saying the value of its land was damaged by the designation. If the lawsuit fails, the Trust Lands Administration hopes to sell or trade its inholdings for federal land outside the monument. Its case in court or at the bargaining table will be strongest if Conoco finds oil or gas.

Right now, says the BLM's Don Banks, the state hasn't much of a case. "The motherlode" is a bit of a stretch," he says. The state's claims are "purely speculative. No oil has been found yet." He expects that many of the remaining federal leases within the monument will expire when their 10-year life spans run out.

As the clock ticks on Conoco's federal leases, the state's need for a trade becomes more urgent. The school-trust parcels are small, and can only be developed as a part of a package that includes leases on surrounding federal lands. If the federal leases expire before the Trust Lands Administration can negotiate a trade, the board won't have much of a bargaining chip.

But the Interior Department has put negotiations on the back burner because the Trust Lands Administration is still trying to kill the monument with its lawsuit.

"It's awful difficult on one hand to be sued and on the other hand to be trying to work in good faith," says Banks.

The Trust Lands Administration faces a tough decision: Drop the lawsuit, concede that the monument is here to stay and work a trade with the BLM; or stand firm and hope that its lawsuit and pressure from Utah's congressional delegation will succeed in demolishing the monument.

At present, the Trust Lands Administration isn't budging. Its lawsuit may not reach the courts for months.

Utah gets tough

As recently as 10 years ago, the Utah Trust Lands Administration would not have had the funds, the staff or the tenacity to take on the federal government. Historically, it was controlled by members of the livestock, mining and oil industries who stuck to business as usual.

"Practically every decision was rife with conflicts of interest," says Jon Souder, a professor at Northern Arizona University who has written extensively on state trust lands. "It was just untenable."

That changed in the late 1980s and early 1990s. A savvy group of college professors, academics, and leaders of the Utah Education Coalition, Parent-Teacher Association and Utah Education Association lobbied the state legislature to force the board to make as much money as possible for Utah's schools.

Economist Margaret Bird, a school-trust lands expert with the Utah Office of Education, led the reform movement. She compares the Trust Lands Administration in its early days to an apartment complex in which the tenants decided how high their rent would be. Her job, she says, was to take back the school-trust lands from the tenants - the ranchers and miners and oilmen - and start "running it like a business."

Bird and her compatriots succeeded. Today, the Trust Lands Administration is run like a land development company. It still has a strong industry bias - the chairman of its seven-member board works for an oil company - but it now includes realtors, developers and bankers.

The new Trust Lands Administration is tough. In 1993, Congress passed Public Law 103-93 to trade school-trust inholdings out of Arches, Capitol Reef, and other national parks and monuments in Utah. The administration agreed to sell or trade, but took the federal government to court last July, claiming the state was not getting enough out of the deals.

That case is still pending, but the School Trust's balance sheet shows that the new approach is working. In 1983, the state school fund contained $19 million, according to Bird. Today, it holds $164 million, and the program grossed $35 million last year alone. Although the increase is striking, school-trust lands still provide less than 1 percent of the state schools budget.

This new bulldog approach may be good for Utah's schools, but reform has complicated things. "We've always had the luxury of having these lands open," says Park City's director of public affairs Myles Rademan. "Now (the Trust Lands Administration) is more aggressive about getting into the development process."

Still, it is difficult to paint the Trust Lands Administration as just another anti-environmental Utah agency. "This is not some right-wing, anti-environmental thing," says Margaret Bird about the board's attitude toward the monument. "All we're saying is we need to get the most out of this for Utah's schoolchildren."

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